What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-07-09 compared with 2024-04-04 · 69 added, 74 removed, 314 unchanged (31% of the section changed)

3 unchanged sentences

(amounts in thousands, except par value)

February 29, 2024

August 31, 2023

30 unchanged sentences

50,000 shares authorized,

10,226 and 10,147 shares issued and outstanding as of February 29, 2024

10,243 and 10,147 shares issued and outstanding as of May 31, 2024

and August 31, 2023, respectively

1 unchanged sentence

10,000 shares authorized,

1,000 shares issued and outstanding as of February 29, 2024

1,000 shares issued and outstanding as of May 31, 2024

and August 31, 2023

6 unchanged sentences

Kura Sushi USA, Inc.

Condensed Statements of Operations and Comprehensive Loss

Condensed Statements of Operations and Comprehensive (Loss) Income

(amounts in thousands, except per share data)

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31,

Restaurant operating costs:

7 unchanged sentences

Total operating expenses

Operating loss

Operating (loss) income

Other expense (income):

1 unchanged sentence

Interest income

Loss before income taxes

(Loss) income before income taxes

Income tax expense

Net loss per Class A and Class B shares

Net (loss) income

Net (loss) income per Class A and Class B shares

Weighted average Class A and Class B shares outstanding

Other comprehensive income (loss):

Unrealized gain on short-term investments

Comprehensive loss

Unrealized loss on short-term investments

Comprehensive (loss) income

The accompanying notes are an integral part of these condensed financial statements.

13 unchanged sentences

Balances as of February 29, 2024

Stock-based compensation

Employee stock plan

Other comprehensive loss

Balances as of May 31, 2024

Comprehensive

Stockholders'

6 unchanged sentences

Balances as of February 28, 2023

Stock-based compensation

Employee stock plan

Issuance of common stock in connection with follow-on public offering, net of underwriter discounts and issuance costs

Other comprehensive loss

Balances as of May 31, 2023

The accompanying notes are an integral part of these condensed financial statements.

2 unchanged sentences

(amounts in thousands)

Six Months Ended

February 29, 2024

February 28, 2023

Nine Months Ended May 31,

Cash flows from operating activities

27 unchanged sentences

Proceeds from exercise of stock options

Proceeds from the follow-on public offering, net of discounts and commissions

Payments of costs related to the follow-on offering

Net cash provided by financing activities

33 unchanged sentences

The carrying value of the short-term investments is equivalent to their amortized cost basis.

As of February 29, 2024 and August 31, 2023, short-term investments were $ 6.1 million and $ 8.5 million, respectively.

As of May 31, 2024 and August 31, 2023, short-term investments were $ 1.3 million and $ 8.5 million, respectively.

The certificates of deposits are deposited at Federal Deposit Insurance Corporation (“FDIC”) insured banks.

1 unchanged sentence

Certificates of deposits and Treasury bills are classified as available-for-sale debt securities which are measured at fair value with unrealized gains or losses recorded in other comprehensive income (loss).

As of February 29, 2024 , the Company recorded $ 76 thousand in unrealized gains on short-term investments in accumulated other comprehensive income (loss), which consisted of $ 75 thousand in unrealized gains on Treasury bills and $ 1 thousand in unrealized gains on certificates of deposits.

The Company reclassified $ 41 thousand out of accumulated other comprehensive income into earnings for the period related to maturities of certificates of deposits and a Treasury bill, which consisted

of $ 41 thousand in realized gains on certificates of deposits a nd none in realized gains or losses on Treasury bills.

The Company determines realized gains or losses on the available-for-sale debt securities on a specific identification method basis.

As of May 31, 2024 , the Company recorded no unrealized gains or losses on short-term investments in accumulated other comprehensive income (loss).

The Company reclassified $ 76 thousand out of accumulated other comprehensive income into earnings for the period related to maturities of certificates of deposits and a Treasury bill, which consisted of $ 75 thousand in realized gains on a Treasury bill and $ 1 thousand in realized gains on certificates of deposits.

The Company determines realized ga ins or losses

on the available-for-sale debt securities on a specific identification method basis.

Base d on the evaluation of credit risk factors, the Company has concluded that an allowance for credit losses is unnecessary for its short-term investments.

14 unchanged sentences

Accounts and Other Receivables

February 29, 2024

August 31, 2023

4 unchanged sentences

Property and Equipment - net

February 29, 2024

August 31, 2023

7 unchanged sentences

Total property and equipment – net

Depreciation and amortization expense for property and equipment was $ 2.8 million and $ 1.8 million for the three months ended February 29, 2024 and February 28, 2023 , respectively, and was $ 5.4 milli on and $ 3.5 million for the six months ended February 29, 2024 and February 28, 2023 , respectively.

Depreciation and amortization expense for property and equipment was $ 3.2 million and $ 2.1 million for the three months ended May 31, 2024 and May 31, 2023 , respectively, and was $ 8.6 milli on and $ 5.6 million for the nine months ended May 31, 2024 and May 31, 2023 , respectively.

The Company has operating and finance leases for its corporate office, restaurant locations, office equipment, kitchen equipment and automobiles.

2 unchanged sentences

Lease related costs recognized in the statements of operations and comprehensive income (loss) are as follows:

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31,

(amounts in thousands)

8 unchanged sentences

Operating Leases

February 29, 2024

August 31, 2023

4 unchanged sentences

Total lease liabilities

Six Months Ended

February 29, 2024

February 28, 2023

Nine Months Ended May 31,

Weighted Average Remaining Lease Term (Years)

3 unchanged sentences

Supplemental disclosures of cash flow information related to leases are as follows:

Six Months Ended

February 29, 2024

February 28, 2023

Nine Months Ended May 31,

(amounts in thousands)

1 unchanged sentence

Operating right-of-use assets obtained in exchange for new operating lease liabilities

As of February 29, 2024, the Company had an additional $ 44.8 million of operating leases related to restaurants for which the Company had not yet taken possession.

Subsequent to February 29, 2024, the Company entered into one additional operating lease related to a restaurant for which the Company has not yet taken possession.

The lease liabilities associated with the lease after February 29, 2024 is $ 4.4 million .

The operating lease is expected to commence in fiscal year 2024, with a lease term of 15 years.

As of May 31, 2024, the Company had an additional $ 44.7 million of operating leases related to restaurants for which the Company had not yet taken possession.

Subsequent to May 31, 2024, the Company entered into two additional operating leases related to restaurants for which the Company has not yet taken possession.

The lease liabilities associated with the leases after May 31, 2024 are $ 15.6 million .

The operating leases are expected to commence in fiscal year 2025, with lease terms of up to 30 years.

Maturities of lease liabilities, net of lease receivables, were as follows:

23 unchanged sentences

Balances with Kura Japan are as follows:

February 29, 2024

August 31, 2023

3 unchanged sentences

Reimbursements and other payments by the Company to Kura Japan were as follows:

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31

(amounts in thousands)

5 unchanged sentences

Total related party transactions

Reimbursements by Kura Japan to the Company were $ 65 thousand and $ 26 thousand for the three months ended February 29, 2024 and February 28, 2023, respectively and were $ 222 thousand and $ 60 thousand for the six months ended February 29, 2024 and February 28, 2023, respectively.

Reimbursements by Kura Japan to the Company were $ 42 thousand and $ 7 thousand for the three months ended May 31, 2024 and May 31, 2023, respectively and were $ 264 thousand and $ 67 tho usand for the nine months ended May 31, 2024 and May 31, 2023, respectively.

The reimbursements were primarily for directors and officers liability insurance, travel, professional fees and other administrative expenses.

11 unchanged sentences

Outstanding — February 29, 2024

Cancelled/forfeited

Outstanding — May 31, 2024

The following table summarizes the restricted stock unit (“RSU”) activity under the Stock Incentive Plan:

7 unchanged sentences

Outstanding — February 29, 2024

Cancelled/forfeited

Outstanding — May 31, 2024

The total stock-based compensation recognized under the Stock Incentive Plan in the statements of operations and comprehensive income (loss) is as follows:

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31,

(amounts in thousands)

8 unchanged sentences

There are no financial covenants under the Revolving Credit Agreement with which the Company must comply.

As of February 29, 2024 and August 31, 2023, the Company had no o utstanding balance and $ 45.0 million of availability remaining under the Revolving Credit Agreement.

As of May 31, 2024 and August 31, 2023, the Company had no o utstanding balance and $ 45.0 million of availability remaining under the Revolving Credit Agreement.

For additional information, see “Note 4.

Related Party Transactions.”

Income (Loss) Per Share

(Loss) Income Per Share

The net income (loss) per share attributable to common stockholders is allocated based on the contractual participation rights of the Class A common stock and Class B common stock as if the income for the year had been distributed.

1 unchanged sentence

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share:

Three Months Ended

Six Months Ended

February 29, 2024

February 28, 2023

February 29, 2024

February 28, 2023

Three Months Ended May 31,

Nine Months Ended May 31,

(amounts in thousands, except per share data)

Net loss attributable to common stockholders

Net income (loss) attributable to common stockholders

Net income (loss) attributable to common stockholders – diluted

Weighted average common shares outstanding – basic

1 unchanged sentence

Weighted average common shares outstanding – diluted

Net loss per share attributable to common stockholders – basic

Net loss per share attributable to common stockholders – diluted

Net income (loss) per share attributable to common stockholders – basic

Net income (loss) per share attributable to common stockholders – diluted

The Company computes basic income (loss) per common share using net income (loss) and the weighted average number of common shares outstanding during the period, and computes diluted income (loss) per common share using net income (loss) and the weighted average number of common shares and potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares include dilutive outstanding employee stock options and restricted stock units.

For the three and six months ended February 29, 2024 and February 28, 2023, there were 678 thousand and 768 thousand shares of common stock subject to outstanding employee stock options and RSUs that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

For the three and nine months ended May 31, 2024, there were 662 thousand shares of common stock subject to outstanding employee stock options and RSUs that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

For the three months ended May 31, 2023 , there were 201 thousand shares of common stock subject to outstanding employee stock options and RSUs that were excluded from the calculation of diluted income per share because their inclusion would have been anti-dilutive.

For the nine months ended May 31, 2023, there were 729 thousand shares of common stock subject to outstanding employee stock options and RSUs that were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive.

Commitments and Contingencies

The Company is involved from time to time in various legal proceedings that arise in the ordinary course of business, including but not limited to commercial disputes, environmental matters, employee related claims, intellectual property disputes and litigation in connection with transactions, including acquisitions and divestitures.

On January 19, 2024, two former employees initiated arbitration against the Company.

Subsequently, on February 26, 2024, three additional former employees initiated a separate arbitration against the Company.

Both sets of claimants allege violations of the Fair Labor Standards Act (“FLSA”) and violations of certain Washington, D.C.

Each arbitration will proceed separately.

T he Company recorded an accrued liability of $ 0.6 million r elated to these matters within general and administrative expenses in the statements of operations during the three months ended May 31, 2024, as the liability associated with these matters became probable and reasonably estimable based on information available to the Company.

As the Company receives new information, it will reevaluate its estimated liability, which may exceed the amount accrued and could adversely affect the Company’s financial position, results of operations or cash flows.

Th e Company is involved from time to time in various legal proceedings that arise in the ordinary course of business, including but not limited to commercial disputes, environmental matters, employee related claims, intellectual property disputes and litigation in connection with transactions, including acquisitions and divestitures.

In the opinion of management, the Company does not believe that such litigation, claims, and administrative proceedings will have a material adverse effect on its business, financial position, results of operations or cash flows.

1 unchanged sentence

The Company records a liability when a loss is considered probable, and the amount can be reasonably estimated.

The Company recorded an income tax expense of $ 50 thousand and $ 15 thousand for the three months ended February 29, 2024 and February 28, 2023, respectively and income tax expense of $ 88 thousand and $ 25 thousand for the six months ended February 29, 2024 and February 28, 2023, respectively.

The Company’s effective tax rates for the three and six months ended February 29, 2024 substantially differed from the federal statutory tax rate of 21 % primarily due to a valuation allowance for the Company’s deferred tax assets.

The Company recorded an income tax expense of $ 60 thousand and $ 41 thousand for the three months ended May 31, 2024 and May 31, 2023, respectively and income tax expense of $ 148 thousand and $ 66 thousand for the nine months ended May 31, 2024 and May 31, 2023, respectively.

The Company’s effective tax rates for the three and nine months ended May 31, 2024 substantially differed from the federal statutory tax rate of 21 % primarily due to a valuation allowance for the Company’s deferred tax assets and permanent difference related to employer tip credit.

The Company continually monitors and performs an assessment of the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies.

1 unchanged sentence

In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses.

Based on the Company’s review of this evidence, management determined that a full valuation allowance against all of the Company’s net deferred tax assets at February 29, 2024 was appropriate.

Based on the Company’s review of this evidence, management determined that a full valuation allowance against all of the Company’s net deferred tax assets at May 31, 2024 was appropriate.

Fair Value Measurements

The following table sets forth the Company’s assets measured at fair value on a recurring basis as of February 29, 2024.

The following table sets forth the Company’s assets measured at fair value on a recurring basis as of May 31, 2024.

(amounts in thousands)

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements